Planet Wealth Stock Market And Options Trading

When it comes to renting US stocks, strategy is of paramount importance. Trading call options (the official term for the practice of “renting” stock) is still a good way to make money on the US market if you play your cards right. However, keep in mind that the US stock market is particularly volatile right now. Play it cautiously.

Renting US Stocks Strategy One: Minimise Your Risk

Call options trading is a good strategy for the US stock market because it is already inherently pretty low-risk, especially if done right. When you rent a stock, it doesn’t matter if the price of the stock goes up, stays the same, or goes down by a small amount: you’re still going to come out on top. The only way to really lose money renting stock is if the stock price goes way, way down. Fortunately, there’s a way to minimize that risk as well.

Renting US Stocks Strategy Two: Insure Your Stock

The best way to minimize the risk you incur from the possibility of a stock dramatically falling in price is to purchase insurance. But insurance is expensive! Insurance can be expensive, yes, and it can limit the profit you make from your stock. However, if you’re renting stock, you can simply invest a part of the premium you earn from every month in insurance.

It will cost you approximately 35% of the premium you earn on stock you rent out to insure approximately 75% of that stock. What does this mean? It means that if the price of the stock you’re renting falls to less than 75% of its price at the beginning of the rental period, you are guaranteed to be able to sell that stock at the 75% price.

Planet Wealth offer a fantastic Trading Diary that explains and recommends Stocks that this strategy is made for.

Written by Clint Maher - Planet Wealth
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